Easy Ways To Boost Your Savings
Many people come to us concerned that they aren't saving enough toward their goals, particularly for retirement, and want to know what they can do to get on track. We find that we can calculate what they need to start saving much easier than they can adjust their spending. It is easiest when they are coming in around a time of significant income increase or expense decrease. What is harder is when they are hoping to have a magic bullet to decrease expenses without changing their lifestyle. Of course, I wish I had that for both my clients and myself. My experience is that people who go from little to no savings to significant savings overnight have problems paying their bills and decide within a month or two that saving isn’t for them.
What is more commonly successful is to figure out what percentage you save now and a reasonable percentage above your goal to save every raise, bonus, gift, or other compensation you receive. For example,
• Jim is saving 5%
• He could comfortably go to 10%
• To retire when he wants safely he needs to be saving 20% or more
• He decides to save 10% of his salary and 35% of any additional
• The day Jim gets a $1,000 raise he increases his ongoing savings by $350 (35%)
• The day he gets a $5,000 bonus he puts a onetime $1,750 towards his savings (35%)
• After a year he is saving 15% and hasn’t had to cut back. Hopefully within a few years he has not only hit the 20% goal, but exceeded it.
Many times hard decisions have to be made to ensure a successful future, but if you can do it little by little, it can make it less painful.